Why ICOs are causing uncertainties in Cryptocurrency Exchanges

Why ICOs are causing uncertainties in Cryptocurrency Exchanges

ICOs that have recently generated a buzz in the crypto world spurring the rise of many cryptocurrency websites and platforms. Cryptocurrency trading platforms allow an individual to offer, purchase or exchange various cryptocurrencies. Thanks to blockchain technology, new tradable digital asset forms are gaining entry to the public domain in the form of tokens (crypto- assets) through vibrant organizations, companies, and ICOs.

As such, startups need not depend on traditional venture capital to get resources to finance their development projects- as they can easily conduct a token sales fundraising event. Interestingly, when you compare with the venture capital money that Bitcoin companies have accumulated this year, ICOs have managed to raise almost four times that amount. For instance, while VC money amounted to only $358 mln amongst the traditional blockchain companies, there was a rise from $26 million to $1.3 bln from 2014 to 2017 respectively.

More tokens, more uncertain problems

Tokens are increasing in number as various platform tokens (ICO) continue to raise more funds. Tokens are being incorporated into the investment strategies of various projects that contributors and investors in certain blockchain companies undertake. Detrimentally, both operators and investors face a real challenge in converting one token to another due to liquidation options of the various tokens in the market.

Several popular centralized exchanges around need token reserves to efficiently trade which becomes a limiting factor. For instance, an individual may face hard times selling or buying an uncommon token that key centralized exchanges cannot support.